WYSK – What You Should Know. Jumeirah’s not-flawless leader. Chrisis is Coming!

Leave a comment

 

 

FOX ON FRIDAY

WYSK – What You Should Know. Jumeirah’s not-flawless leader. Chrisis is Coming!

 

Jumeirah’s leader – not flawless

Gerald Lawless, CEO of Jumeirah Hotels, is Irish. Given some of his statements, I assume he is from Limerick? In a public presentation, he said he wants to grow JH from 82,000 rooms now to 150,000 in 2020. The figures did not look right to me, so I asked JH to confirm. Their reply: ———————————————

I presume they do not want to convert a personal statement into a corporate strategy.

This is not the first time I have had problems with GL’s statements:

-GL says JH’s hotels in Dubai had 82-85% occupancy in 2014 at US$600 average room rate. This differs from J’s public accounts which show 80% at US$293 (AED1708) revpar; JH does not reveal ARR, but this indicates it was not more than US$500.

-In 2011 GL said that JH would have the same number of hotels as Four Seasons within two years – despite the difficult maths. At the time, FS had 80; today it has 98. Depending how you count, JH has 25 today.

-And those 80,000/150,000 rooms. JH has only about (some are residences-so-half-hotels) 25 hotels and 16 under-development. Adding those would mean an average 2000 rooms in each hotel – so an apparently-large exaggeration.

-GL has proposed similar expansion before, and missed. In 2009 he said JH had 11 hotels open, and 11 under development. Two years later, when JH had 10 hotels, he said the group would have 60 hotels open or planned by 2012.

Maybe I should judge GL’s declarations on their poetic value?

Chrisis is Coming! Chrisis is Coming!

To further mix my metaphors…One swallow does not make a spring, or whatever, but there are more than a few airline traffic figures that could signal trouble ahead.

That is because, in general, trip movements are growing broadly at around 4%, possibly a little higher. And so, broadly, an airline’s traffic growth should be close to that pace.

But following my latest data-processing (disaster-processing?) exercise, a few big ones are some way short of this.

In a recent Fox-on-Friday, I reported on figures that appeared to show Air France was doing badly. It might be (AF figures are not separated from its group totals) the most of the biggest – if you get my meaning. But, note also, for Q1 or latest:

-Air France group -0.4%, Lufthansa group -1%.

-Even Delta-supported Virgin -8%. And Turkish, which for the past few years has been around +20%, is down to +7%. SAS – for which I have predicted break-up for many years, and thus been wrong for many years – is -1%. Only IAG (British Iberia Vueling) is doing well, +9%.

-(As an aside, the Ryanair NFA (no-frills-airline), Europe’s biggest single airline since 2009, is growing at 25%.)

 

The Fox

Remember, I’ll be famous after I’m dead.

Advertisements

WYSK – What You Should Know. China Southern, Tahiti.

Leave a comment

 

FOX ON FRIDAY

 

WYSK – What You Should Know. China Southern, Tahiti.

China Southern group; not Guangzhou

Being rather simple in my approach to statistics, I presumed that the extraordinary growth at China Southern was a result of growth in the region around where it is based – Guangzhou. That is where I have been sending everyone who asked (yes, him).

 

Whoops.

 

Seat sales on CS – which is China’s-thus-Asia’s biggest airline, don’t forget – grew 10% systemwide in 2014 (faster this year; +12%) and 21% on its international routes (+32%!)! That is doubly impressive.

 

Then one day when I had nothing better to do, I stumbled on passenger data at Guangzhou airport – a dull just-above 4% all flights in 2014, and a duller just-under 4% international.

 

As CS represents around 70% of its home-airport traffic, where are those extra passengers on CS? Answers:

 

-Elsewhere in the south. CS also owns 100% of Chongqing Airlines, Xiamen Airlines, and others whose traffic is included in its total.

 

-Elsewhere. China’s airline-management system is a mess (encouraging in the free-economy sense, disappointing in the communist controlled-economy sense). So Guangzhou-based CS also has flights that leave from Beijing – the heartland of its comrade airline Air China – to places elsewhere, including outside China. And it has other hubs, in Chongqing and Urumqi.

 

This seems to mean that CS is doing well because it is a smart airline, not just because it is based in the fast-growing south.

 

 

Tahiti; paradise lost

Tahiti, alongside Bali and Hawaii, is probably the best-known tourist-hedonic destination worldwide.

 

Well, there is trouble in paradise.

 

I don’t track results there carefully – partly because it has become less important. But I have its peak at 250,000 visitors for all-2000. Arrivals have fallen more-or-less consistently since then, and in 2014 they were 181,000. That is a miserable 3500-per-week. A place like Sri Lanka manages 10-times that!

 

The main reasons are:

 

-The place is costly. As a French colony it is supported by the French state – which makes things costly and people lazy.

 

-The negative economics of isolation (a long way from anywhere; 4500km from Hawaii, 6000km Australia, 8000km Chile) and smallness (fewer than 200,000 people), most stuff needs to be imported. Not much is exported; the main sector is the visitor business.

 

-Because of the above-noted support from the colonial power, people are not friendly – in the sense that they see no reason to go out of their way to please visitors. Because they do not rely on the business from visitors to live.

 

-That geographical isolation means that few airlines can afford to fly there. In the past, it was sometimes a sort-of operational stopover between North America and Australasia. Now, aircraft not only fly over, but fly a more direct route that is far from Tahiti.

 

Solution:

 

-(I need more time.)

 

 

The Fox

Remember, I’ll be famous after I’m dead.

 

WYSK – What You Should Know. ICCA PATA.

Leave a comment

FOX ON FRIDAY

WYSK – What You Should Know. ICCA PATA.

ICCA’s Iccup

ICCA tells me that there was no change in the list of cities with the most association meetings.

Sorry, there was. In 2013 it was Vienna, Paris, Barcelona, Berlin, Madrid, and in 2014 Paris, Vienna, Berlin, Barcelona, Madrid.

I am using ICCA figures.

But – I use 5-year averages. I was motivated by those in the MICE segment of the travel business – who told me that single-year figures can be misleading. As a result, I calculate average-annual totals based on 5-year periods – to balance out distortions caused by unusually-big or -small events in one year.

Surprisingly, the industry itself still works on annual figures! Even more surprising is that in 2013 ICCA said it was following my practice and tracking results in 5-year averages. Despite that, all its analysis and observations continues to be based on single-year figures!

Use my ICCA figures, not ICCA’s ICCA figures.

And while on that topic, there seems to be an awful lot of attention given to ICCA’s figures – which are, after all, such a small part of just one segment of the MICE business.

 

 

PATA’s Patter

PATA tells me that there were 550mn visitors in Asia Pacific in 2014. That’s nice, although I am not sure in what way this is valuable. I will give you some reasons why I worry…

-Many of those Asia Pacific destinations might not be in a list that you would draw up. The US is there, for instance, as are Canada and Chile. Not Mexico, but Peru. And a new one to me (which is not the same as saying its inclusion is new) – Turkey. Turkey?

-The top-5 destinations are China, US, Hong Kong, Turkey, Macau. Maybe in that order (PATA will only sell, not give, more information; a policy with which I agree, even if it causes me difficulties from time to time).

-I have problems with all five. Turkey and US for reasons noted above. And China, Hong Kong, Macau, for inter-related matters. As they are all ‘China’ (a fact endorsed by PATA adding the moniker ‘SAR*’ for HK&M), many of these visitors are actually domestic travellers.

I suspect PATA cannot bring itself to make the change – because it would upset all three destinations to ‘lose’ millions of visitors (50mn total?). And China not only likes to come top, but certainly hates to be down-listed.

This comes back to my point. What is the value of that 550mn count?

 

*SAR is Special Administrative Region (of China).

The Fox

Remember, I’ll be famous after I’m dead.

What You Should Know. Air France, Dubai, Japan, Korea, Ryanair

Leave a comment

FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.

Foxtrots – leading the industry in a dance.

Q1: Things you should know. Air France, Dubai, Japan, Korea, Ryanair.

(An excerpt from our monthly Travel Business Analyst newsletter.)

Some important pointers from some Q1 counts, with a longer starter on Air France. In alphabetical order:

Air France

There is something hard to guess with traffic figures for the Air France group for Q1. Something that is not clear, but seems to indicate that things are not going well. The AF group often changes definitions for its reporting. I do not know why, but I cannot quite believe it is a crude attempt to make tracking progress difficult – even if that is the result.

Seat sales for the group (AF Hop KLM Transavia) grew 1.2%. Without Transavia (the only airline reported separately; why?) growth almost vanished – +0.3%.

My point is that both Hop and Transavia – because they are relatively new or because of the sector they operate in – should be growing faster. Transavia grew 12%, which is good but not outstanding (Europe’s biggest no-frills-airline, Ryanair, grew 30%).

But this indicates that Hop’s growth was under 5% and that seat sales are falling at AF or at KL. We believe AF is falling and KL is growing (perhaps 2-3%). Which would make AF’s fall around 2% and up to a very-bad 5%.

Perhaps AF should rethink its policy on publicity to avoid speculative analysis, as above. If speculation is negative, that can be worse than negative reality – because additional adjustment is made. In other words, AF’s stock price may be worse than it should be. At end-April (when Q1 traffic results were known), the AF-KL stock was 3.2% down on its end-2014 price.

Dubai

Airport passengers +7%. That is just above the all-2014 rate – +6% – but not as fast as many seem to think.

Japan

Visitors +44%. A lot is thanks to China (+92%, and +160% in the Lunar New Year month!). Even if the China/Japan political thaw is hardly starting, the Chinese people, it seems, are already voting with their feet.

Korea

Outbound. Even though it has only just overtaken Japan (this year), it is now already 20% bigger.

Ryanair

Do not forget, Europe’s biggest airline (of all types). Yet, its seat sales +30%! That makes it the same size as AF+KL and BA+IB, and about to zoom past LH+LX+OS.

The Fox

Remember, I’ll be famous after I’m dead.

 

Super-connector airlines report; my response.

Leave a comment

FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.

Foxtrots – leading the industry in a dance.

 

Super-connector airlines report; my response.

A report in The Economist on what it calls ‘super-connector’ airlines covers most of the essentials. Some important items were missing, however.

 

  1. The big fault is that no FSA (full-service-airline) has copied the Gulf airlines’ businessplan based on their own geographical advantage. For instance, why not British Airways 1-stop Toulon-Atlanta or Cagliari-Portland via London? Or Barcelona-Toronto via Helsinki on Finnair?

 

And none has matched, say, the same offer as Emirates in Dubai itself. The United Arab Emirates has arguably the ‘openest’ open-skies aviation policy. Why does Lufthansa not start a division with Dubai as its hub, offering a connection, say, Munich-Yangon?

 

The probable answer to both of these is that such moves require dynamic management to make it work. And Europe, North America and even parts of Asia, no longer have that.

 

 

  1. Asia Pacific airlines were not included in the report, which also commented on traffic in terms of RPKs. This is not the best measurement for such a report; ‘seats sold’ would be better. And the two AsPac leaders in international RPKs, Cathay Pacific and Singapore Airlines, would have been just after British Airways – 7th and 8th.

 

 

  1. The first ‘super-connector’ was Singapore Airlines, taking travellers to/from Europe to Australasia via Singapore. This no longer works (Singapore Airlines’ RPKs fell 1% in 2014, and are falling faster this year) for the same reason – Emirates etc are attracting the passengers. SA does not know how to respond.

 

 

  1. Longhaul NFAs (no-frills-airlines) does not seem a good strategy. Failures include Laker, Oasis, People Express, Saber. More recently, Air Asia X pulled off its longhaul routes, Singapore Airlines changed the businessplan of its Scoot subsidiary before launch and dropped plans for longhaul routes, and the first route of the supposed-longhaul NFA NokScoot is Bangkok-Singapore!

 

 

  1. LCAs (low-cost-airlines) may be the answer for companies such as Air France and British. These are not NFAs, but FSAs with lower costs – fewer staff/multiple skills, cheaper-hotel overnights, more hours worked, cheaper operational/legal bases, etc. One is the international route operation from Australia of Qantas subsidiary Jetstar (not, confusingly, its domestic and Asia operations, which are NFAs). Lufthansa may be unwittingly creating one with its plans for Eurowings, due to be relaunched this autumn, with intraEurope as well as inter-continental routes. The problem with Eurowings is that Lufthansa management is trying to make it an NFA also; that will probably not work.

 

 

The Fox

Remember, I’ll be famous after I’m dead.